YV: Oh well a lot of it. But the inside information one gets… to have your worst fears confirmed … To have “the powers that be” speak to you directly, and it be as you feared – the situation was worse than you imagined! So that was fun, to have the front row seat.

HL: What are you referring to?

YV: The complete lack of any democratic scruples, on behalf of the supposed defenders of Europe’s democracy. The quite clear understanding on the other side that we are on the same page analytically – of course it will never come out at present. [And yet] To have very powerful figures look at you in the eye and say “You’re right in what you’re saying, but we’re going to crunch you anyway.”

HL: You’ve said creditors objected to you because “I try and talk economics in the Eurogroup, which nobody does.” What happened when you did?

YV: It’s not that it didn’t go down well – it’s that there was point blank refusal to engage in economic arguments. Point blank. … You put forward an argument that you’ve really worked on – to make sure it’s logically coherent – and you’re just faced with blank stares. It is as if you haven’t spoken. What you say is independent of what they say. You might as well have sung the Swedish national anthem – you’d have got the same reply. And that’s startling, for somebody who’s used to academic debate. … The other side always engages. Well there was no engagement at all. It was not even annoyance, it was as if one had not spoken.

Another opinion poll, from the Proto Thema website, shows the ‘Yes’ camp at 41.7% while the ‘No’ camp is at 41.1% and 10.7% are undecided.

100 researchers from the European University Institute have come out in support of the ‘No’ camp in Greece. The institute is an international postgraduate and post-doctoral teaching and research institute set up by European Union member states.

Oxford Economics says:

Whatever the referendum outcome, the ECB is unlikely to significantly increase ELA [emergency liquidity assistance to Greek banks] limits any time soon.

Economists at Société Générale say:

A ‘Yes’ vote: a semi-stable outcome at best.

A ‘Yes’ vote would allow negotiations to resume on the basis of the late June proposals. However, early elections or an unstable coalition would also follow a ‘Yes’ vote. And given the time and complexity entailed by a new programme, the third Greek bailout (worth between €60-80bn in our opinion) is unlikely to be approved before late August. As a result, Greece is set to default on its ECB debt repayments (both in July and August).

At least half a million Greeks are unable to vote in the referendum – unless they return to the country before Sunday’s poll. Under Greek law, people must travel home to where they are registered for voting.

Since the 2007-08 financial crisis, 405,666 Greeks have left the country, according to Eurostat, the European Union’s statistical office.

It’s appalling that over half the population is going to vote to accede to the Troika’s demands or is still undecided (and therefore, IMO, likely to vote from fear of the unknown rather than experience). If Tsipras fails to get his OXI (No) vote–despite the clear warnings from economists of all stripes that a Yes vote merely delays the inevitable by a few months–he will resign and leave Greece in the hands of the incompetents and the corrupt who got Greece into this mess.

One wishes that this would not prove to be yet another Greek tragedy. But there are only a few hours for public opinion to turn.

So, sat at the table after dinner, I started a crowdfunding campaign to try to rescue the Greek economy. Some basic maths told me that I only needed the entire population of Europe to donate €3.19 (£2.26) to reach the amount of the bailout fund [roughly €2.2B or $2.5B]. I included some nice perks for donating, including a Greek salad and holiday in Athens for two, and set up a page on IndieGoGo and a Twitter account.
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I set up the crowdfunding campaign to support the Greek bailout because I was fed up with the dithering of our politicians. Every time a solution to bail out Greece is delayed, it’s a chance for politicians to posture and display their power, but during this time the real effect is on the people of Greece.
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The way to help a struggling economy is by investment and stimulus – not austerity and cuts. This crowdfunding is a reaction to the bullying of the Greek people by European politicians, but it could easily be about British politicians bullying the people of the north of England, Scotland and Wales.
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The reaction has been tremendous, I’ve received thousands of goodwill message and as I write almost €630,000 has been pledged by more than 38,000 donors.

While the probability of successfully resolving the Greek financial crisis by this method is not terribly high, the potential for embarrassing the politicians into writing down Greek debt is pretty good. The fund is, as of 2:30PM EST, at 1.1M euro. You can donate here.

Let’s suppose that you took the $100,000 mortgage on your house and sold it to your five-year old son for $1. Now you don’t have any liabilities! So you can buy that flat screen TV you always wanted.

But of course, when the bank comes around looking for their payment, your 5 year old son won’t have anything to give them.

This is what the life insurance companies have done, creating out of state shell companies to buy their liabilities in a phony “re-insurance” scheme. It looks to me to be exactly like the Enron scheme, turning a liability into an asset in an off-the-balance-sheet maneuver. According to Walsh, Lawsky says these deals were backed by “’hollow assets,’ ‘naked parental guarantees’ and ‘conditional letters of credit.’” And if the life insurers are doing this, what are other insurers doing?

These are publicly traded companies, so an investigation into whether or not this is fraud should be mounted. Walsh:

The separate analysis by SNL Financial, by contrast, was based on public regulatory filings. It did identify the life insurance companies that are the biggest users of the transactions, both in and out of New York. They include Transamerica, MetLife, Prudential, Hartford, Genworth, John Hancock, ReliaStar and Lincoln National, among others. Another insurer, Allstate, turned up in the sample even though its primary business is property and casualty, because it owns some life insurers.

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Hard-pressed company bosses across much of the world are under so much pressure to deliver on growth that many have resorted to cooking the books, Ernst & Young said in a survey Tuesday.

One in five of almost 3,500 staff quizzed in 36 countries in Europe, the Middle East, Africa and India said they had seen financial manipulation in their companies in the last 12 months, the accounting and consultancy firm said.

In addition 42 percent of board directors and top managers questioned in the fraud survey said they were aware of “some type of irregular financial reporting.”

Conspicuously missing from the country list: the US. Where Jeffrey Skilling of Enron could have his sentence reduced by 10 years. Because, of course, lightening penalties on white collar criminals deters crime.

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Robin Harding and Tom Braithewaite at the FT reports that the Fed is balking at exiting its purchase of assets from the banks to keep them from going under. At the moment, it holds $ 1.6 Trillion and is expected to purchase $1T more. At the moment, it’s paying at 0.25%, or just $4B/year. But the exit plan is to get interest rates back to 2% before regurgitating that much paper. That would be over $50B, which is more than the profits at the biggest banks. Bad optics, you know.

And then there’s the question of losses that the Fed may take. They didn’t get to buy all that paper because the banks thought it was profitable. They got to buy it because the banks thought it was manure. While I doubt they’ll lose all that much (and they can just raise their assessment on the member banks), it will become a matter for public comment.

Some four years after the crisis, big banks’ shares remain depressed. Even after a run-up in the price of bank stocks this fall, many remain below “book value,” which means that the banks are worth less than the stated value of the assets on their books. This indicates that investors don’t believe the stated value, or don’t believe the banks will be profitable in the future—or both. Several financial executives told us that they see the large banks as “complete black boxes,” and have no interest in investing in their stocks. A chief executive of one of the nation’s largest financial institutions told us that he regularly hears from investors that the banks are “uninvestable,” a Wall Street neologism for “untouchable.”

That’s an increasingly widespread view among the most sophisticated leaders in investing circles. Paul Singer, who runs the influential investment fund Elliott Associates, wrote to his partners this summer, “There is no major financial institution today whose financial statements provide a meaningful clue” about its risks. Arthur Levitt, the former chairman of the SEC, lamented to us in November that none of the post-2008 remedies has “significantly diminished the likelihood of financial crises.” In a recent conversation, a prominent former regulator expressed concerns about the hidden risks that banks might still be carrying, comparing the big banks to Enron.

The only justifiable reason to worry about the banks because there isn’t effective regulatory oversight. We all know what the situation is: in very round numbers, 10 million people were unexpectedly unable to pay their mortgages with a face value somewhere above $1T. A similar, though lesser, situation obtained for businesses. The actual losses those represented were much smaller, since (as long as it is maintained) a house remains an asset even if it is vacant. The true losses are the mortgage payments. Those might represent $100B/year, as long as the home or commercial property remains vacant. Those true losses have to be accounted for through reduced bank profits or taxpayer assistance. In what amounts to profitable banks (especially past profits) propping up banks through the Federal Reserve giving sweetheart loans, we are gradually working through the inventory of vacant homes, the losses to the banking system are falling, and things are getting back to normal.

Unless they are not. The problem is that, while we know that mortgage lending standards have improved, there isn’t much to keep them from going off the rails again. And certainly as long as the banks keep their books secret and their practices immune from regulatory oversight, investors will want exceptional assurances from them. Who wants to buy a pig in a poke?

There’s been so much corruption on Wall Street in recent years, and the federal government has appeared to be so deeply complicit in many of the problems, that many people have experienced something very like despair over the question of what to do about it all.

But there’s something brewing that looks like it might eventually turn into a blueprint to take on the financial services industry: a plan to allow local governments to take on the problem of neighborhoods blighted by toxic home loans and foreclosures through the use of eminent domain. I can’t speak for how well this program will work, but it’s certaily been effective in scaring the hell out of Wall Street.

Under the proposal, towns would essentially be seizing and condemning the man-made mess resulting from the housing bubble. Cooked up by a small group of businessmen and ex-venture capitalists, the audacious idea falls under the category of “That’s so crazy, it just might work!”

Since the Supreme Court has radically expanded the power of eminent domain to permit the seizure of homes for the incredibly important public purpose of building a shopping mall, doubtless they will feel constrained by shame not to reverse such a precedent so quickly.

Oh, that’s right. The Supreme Court has no shame.

Anyway, we will not get out of the depression until the housing crisis is resolved. It’s either wait for it to grind to an end by natural means or force the banks to resolve it by something like this scheme. I say give it a shot.

Chris Hayes has a new book, Twilight of the Elites, whose title he calls “aspirational,” and I think he’s sold me a copy. The point of the book is that people who can get away with things are doing so at an alarming rate. There’s a word for this which we learned from Honduras: impunity. Hayes ties together the Catholic pedophilia/ephebophilia scandal with the Penn State pedophilia/ephebophilia scandal as examples of how elites have come to believe that no matter what they do, there will be no consequences. From DemocracyNow:

CHRIS HAYES: It’s such a perfect example, again, of this concept of social distance, right? I mean, the people like Robert Gnaizda and the folks at the Center for Responsible Lending down in North Carolina that were working among communities that were on the wrong end of the subprime crisis, right, that were seeing their homes foreclosed on, that were seeing equity stripped out, that were seeing these serial refinancing with fees and fees and fees—the folks working there started ringing the alarm bells in 2002, 2003, publishing reports saying, “We’re going have 10 million foreclosures. This is going to be a total disastrous thing.” And they were meeting with the Federal Reserve, and they were waving charts in their faces, right? They were giving them data. And the Federal Reserve didn’t act.

So the question is, why didn’t the Federal Reserve act? And there’s a whole bunch of complicated reasons. But I think, partly, at the core of it, is that they, the folks in the Federal Reserve—Frederic Mishkin; Ben Bernanke, who was a Fed governor, who was saying, “Don’t worry about subprime,” more or less; Alan Greenspan, the Fed chair—were just completely removed from the world in which subprime finance was metastasizing and wreaking havoc. And that removal allowed them to sort of go along doing what they were doing, doing the things that they thought were ideologically justified or justified by the data. When they didn’t—they were not embedded in that world. And the thought experiment I have in the book is, if Ben Bernanke or Alan Greenspan were in a neighborhood where this was happening, if they were walking down their street every morning and seeing the foreclosures signs, if they had a neighbor who had been through one of these serial refinancing and had all the equity stripped out and now faced foreclosure, I can’t help but think the Fed would have cracked down much earlier and with much more vigor.

Bingo. If the elites had to see the consequences of their decisions in the lives of their neighbors, they might very well make better decisions. As long as it’s someone invisible who is getting thrown on the street or denied medical care, anything goes.